Rotten apples, systems hurting ailing Americans
Martin Shkreli, the former hedge-fund manager turned pharmaceutical CEO who was arrested last week, has been described as a sociopath and worse. In reality, he’s a brasher and larger version of what others in finance and in corporate suites do all the time.
Federal prosecutors are charging him with conning wealthy investors.
Lying to investors is illegal, of course, but it’s perfectly normal to use hype to lure rich investors into hedge funds. And the line between the two isn’t always distinct.
Hedge funds are lightly regulated on the assumption that investors are sophisticated and can take care of themselves.
Perhaps prosecutors went after Shkreli because they couldn’t nail him for his escapades as a pharmaceutical executive, which were completely legal — although vile.
Shkreli took over a company with the rights to a 62-year-old drug used to treat toxoplasmosis, a devastating parasitic infection that can cause brain damage in babies and people with AIDS. He then promptly raised its price from $13.50 to $750 a pill.
When the media and politicians went after him, Shkreli was defiant, saying “our shareholders expect us to make as much money as possible.” He said he wished he had raised the price even higher.
That was too much even for the Pharmaceutical Research and Manufacturers of America, Big Pharma’s trade group, which complained indignantly that Shkreli’s company was just an investment vehicle “masquerading” as a pharmaceutical company.
Maybe Big Pharma doesn’t want to admit that most pharmaceutical companies have become investment vehicles. If they didn’t deliver for their investors, they’d be taken over by “activist” investors and private-equity partners who would.
The hypocrisy is stunning. Just three years ago, Forbes Magazine praised Shkreli as one of its “30 under 30 in Finance” who was “battling billionaires and entrenched drug industry executives.”
Last month, Shkreli got control of a company with rights to a cheap drug used for decades to treat Chagas disease in Latin America. His aim was to get the drug approved in the United States and charge tens of thousands of dollars for a course of treatment. Investors who backed Shkreli in this venture did well.
While other pharmaceutical companies don’t dramatically raise their drug prices in one fell swoop, as did Shkreli, they would if they thought it would lead to fat profits. Many have been increasing their prices more than 10 percent a year — still far faster than inflation — on drugs used on common diseases such as cancer, high cholesterol and diabetes.
This has imposed a far bigger burden on health spending than Shkreli’s escapades, making it much harder for Americans to pay for drugs they need. Even if they’re insured, most people pay out big sums in copayments and deductibles.
Not to mention the impact on private insurers, Medicare, state Medicaid, prisons and the Veterans Health Administration.
Shkreli may be a rotten apple. But hedge funds and the pharmaceutical industry are two rotten systems that are costing Americans a bundle.
When President Obama addressed the nation after the terrorist attacks in San Bernardino, he reiterated the call to resist animus toward Muslims.
This was a familiar message — the same we had heard fromPresident GeorgeW. Bush after the 9/ 11 attacks. We aren’t at war against Islam, both presidents have said, but against an ideology built on distortions (or medieval-minded interpretations) of the Islamic religion.
Even so, many Americans still need to be reminded thatMuslims, rather than being our enemies, are our friends, neighbors, colleagues, scholars, leaders, doctors, mechanics. They’re our fellow Americans. Even